No country ever gave aid that was not in some way in its self-interest to do so,’ says Nilima Gulrajani, senior research fellow for the Development and Public Finance Programme at the Overseas Development Institute (ODI). ‘The act of giving aid involves one party having more power than the other; one entity has less money than the other.’ Yet it’s also undeniable that international aid has played a huge part in reducing poverty, eradicating disease and boosting infrastructure all around the world.
Today, the picture is ever more complicated and the landscape of international aid is changing in response. Cop26 in Glasgow produced mixed results for tackling climate change, to say the least, but the summit did seek to rejuvenate a pledge of US$100 billion for climate finance. Representing the largest ever post-war pledge on aid, this vast sum – subject to everyone coughing up – is intended to help low-income countries both mitigate climate change through clean technology and become more resilient to those impacts of a warming planet that are already baked in. Yet, whether the money really emerges, and how it will fit within the context of more traditional aid projects, is far from certain.
THE CHANGING LANDSCAPE OF AID
International development aid first emerged as a structured phenomenon at the end of the Second World War and was reinforced by the dismantling of colonial empires that followed in the 1950s. The UN then declared that the 1960s would be the ‘Decade of Development’, a time when countries from what we then called the Third World would shake off colonialism and poverty. ‘It was about doing whatever you could to make people less poor, and that involved investment in education, health and infrastructure,’ says Peter Taylor, director of research at the Institute for Development Studies at the University of Sussex. However, as the post-colonial era emerged, he says, ‘the concept developed that the Global North was superior and had all the answers, and that the world should look like a few select countries.’
Today, while the core focus of aid remains that of tackling chronic malnutrition, disease eradication, education and sanitation, as the aid sector evolves it has found itself increasingly entangled in global and local politics, most recently in relation to climate funding and Covid-19 vaccine distribution. So, too, has its very nature changed.
The days of aid being doled out by ‘the men in white shorts’ are largely over, according to Duncan Green, senior strategic adviser at Oxfam. ‘There’s a lot more of an intellectual understanding of the need to root aid among local players,’ he says. ‘If you don’t consult local politicians, civil society and experts, you are just reinforcing colonial trends.’
The shift from out-dated tropes has been driven in part by one of the by-products of long-term development: the greater wealth that has facilitated the travel industry. ‘International travel – both from North to South and South to North – has involved the mixing of people, the ability to see reality on the ground,’ says Taylor. ‘That has led to much more public questioning about what aid can achieve. What we see now is much more local ownership, more expectations of clear accountability, transparency and good governance.’
Crucially, there’s an understanding that the poorest in society need to not just be targeted by aid but involved in what form that aid takes, according to Jillian Popkins, director of policy, advocacy and programmes at ActionAid. ‘The idea of charity based on Victorian ethics is rightly being questioned,’ she says. ‘We are moving away from charity being a question of simply giving money. The view that development should be led by those who are most affected, those who are most marginalised, has become mainstream. That [sentiment] was always there but it was hard to make the case.’
This transition in mentality has been accompanied, to some extent, by a geographical shift. Twenty years ago, ActionAid took the decision to no longer be centred on a global HQ in the UK and be federated in different countries, with an HQ in the Global South. ‘Covid-19 may facilitate this trend, as the difficulty to travel internationally has forced more aid to be delivered by local agencies,’ adds Gulrajani.
The sources of aid are slowly shifting, too, as the growing wealth of many nations has led to more local aid-giving. Some low-income nations are moving into the middle-income bracket. ‘As a country gets richer, you get an emerging middle class and they, in turn, donate money, so you move further away from the North–South dependency,’ says Green.
Levels of aid donations are monitored by the Development Assistance Committee (DAC), a branch of the Organisation for Economic Cooperation and Development (OECD). In 2010, OECD official development assistance amounted to US$128.7 billion; by 2020 it had risen to an all-time high of US$161.2 billion, up 3.5 per cent in real terms from 2019. The latest available data show that the USA was the biggest donor (US$35.47 billion; up from US$30.2 billion in 2010) followed by Germany (US$28.41billion). The UK was the fourth-largest donor (after EU institutions), providing US$18.56 billion to aid projects. However, only four countries exceeded the UN target of spending 0.7 per cent of Gross National Income on aid in 2020 – Denmark (0.73 per cent), Luxembourg (1.02 per cent), Norway (1.11 per cent) and Sweden (1.14 per cent). The UK invited heavy criticism by cutting its proportion to 0.5 per cent (see box on page 21). France has committed to 0.7 per cent until at least 2025.
In the past, countries such as Portugal, Taiwan, Singapore, South Korea and Qatar were on the DAC’s list of low-income countries that qualified for international aid. More than 60 have left the list since 1970 and in January 2022, Antigua and Barbuda, and Palau were removed. That leaves 46 nations classified as Least Developed Countries (qualifying for maximum aid donations), 34 of them in Africa.
WORK TO BE DONE
What’s clear is that these changes were necessary. When it comes to aid, there have been serious failures along the way. Gulrajani points to the exploitation of power by aid agencies and even UN bodies, such as the sexual exploitation in Haiti by Oxfam staff. ‘Racism may be more subtle, less explicit, but it still happens,’ she says. She notes that only six per cent of staff at UK NGOs are from minority-ethnic backgrounds.
ActionAid’s Popkins is also mindful that aid can still be too targeted on specific goals and outcomes. Governments today have more say on exactly where money is spent and this can shove civil society organisations to the sidelines. In the UK, overseas development aid (ODA) is delivered via two channels: bilateral (sent directly to the countries involved) and multilateral. Bilateral aid, which counts for around 65 per cent of UK aid, is usually spent through aid organisations, such as the World Food Programme, NGOs and civil society organisations, and research institutions and universities. In each instance, the donor has specified where and/or what the ODA is spent on. According to the ODI, only 15 per cent of bilateral aid goes to civil society organisations and only six per cent goes to in-country NGOs. ‘We now tend to work with contracts rather than grants. They show where taxpayer’s money ends up but they can be less flexible,’ says Popkins.
Perhaps counter-intuitively, more transparency can reinforce older approaches of ‘do as we say, we know best’, according to Oxfam’s Green. ‘The demand for greater accountability, to know where exactly aid goes, has led to more wariness of allowing local players to make decisions on spending,’ he says. ‘Donors are wary of ending up in front of the US Congress or a parliamentary committee, so they can be inclined to play safe.’
As for progress in outcomes from aid, the picture is mixed, says Popkins. ‘When you look at who has benefited from aid, there are major gaps,’ she says. ‘It tends not to be those who are in extreme poverty or the chronic poor. Things haven’t changed so much for them.’ The climate crisis, the economic crisis – dating back to 2008 – and the Covid-19 pandemic have exacerbated problems for the most vulnerable and hampered advances in development, she says. ‘It has led to a backlash, of violence, of girls dropping out of school, of forced marriage. Human rights have been rolled back.’
Aid is becoming more gender focussed
Despite more than 60 years of long-term development projects, one reality remains mostly unchanged: rural women remain at the margins of development, particularly regarding access to productive resources and decent work. They bear a disproportionate burden of unpaid-carer work, such as child care, cooking, housework and collecting fuel, water or food. In Bangladesh, women complete nearly eight hours of unpaid care work each day (nearly three times what men do).
To try to address this imbalance, ActionAid is working in Bangladesh, Pakistan, Ghana and Rwanda on a project called POWER. Elements have included establishing day-care centres for young children to enable women to work. Another key move has been to emphasise sustainable agriculture, using fewer pesticides and costly seeds in order to reduce overheads and ties to suppliers, and to plant crops more specific to the local climate and conditions. Other measures include helping women who grow crops to sell any surplus for better prices at markets traditionally dominated by men.
Local facilitators with whom ActionAid has spent decades developing relationships have been used. Following discussions with elders and other stakeholders, men in the community agreed to share more of the labour. Women were given the opportunity to plant crops, which had two benefits: it introduced more nutrition into the household and it enabled the women to sell the surplus at market, thus bringing in additional income.
FUNDING CLIMATE RESILIENCE
Climate change is likely to remain one area where a North–South direction for aid remains, argues Green, who suggests we think of money targeted at the issue as a form of global public good. ‘It’s about collective action,’ he says. ‘Covid-19 has shown us that we can’t get out of the pandemic if we only vaccinate half the world. That same principle says that climate change will still happen if Britain only addresses its own greenhouse gas emissions. You only make a difference by working collectively.
The trouble is, that despite the evidence for climate change being incontestable, the subject gets politicised. ‘This will get really difficult,’ says Green. ‘It’s a lot easier to get funding for stuff you can count – mosquito nets, vaccine doses – less easy for things you can’t: the strength of storms, disabled-children support, gay rights.
‘Climate finance is the most difficult area. It raises the question of the redirection of aid,’ he continues. ‘But it also has to be additional to what else is given. You can’t address the climate and cut funding to female education.’
Popkins is also concerned that climate change aid will displace existing aid streams. ‘We have to make sure that climate funding is additional,’ she says. ‘We already know that most countries have fallen short of their promises and pledges.’ Such funds also need to be grants rather than loans, she says, ‘otherwise you are just putting people further into poverty.’
Green envisages a world where, while great challenges such as sanitation, literacy and malaria are slowly but inexorably chipped away, aid targets both more everyday and intangible elements. ‘There’s now a much broader definition of what poverty means. Aid can also be targeted at areas such as the freedom to be or to do, the freedom to love who you want, gay marriage. NGOs can be part of shifting those social norms. You will run up against pushback but it’s not new. Fifty years ago, it was normal in many countries to beat children; now there aren’t many countries that think it’s fine. Diplomatic skills will be really important. We can’t throw our weight around, not least because we [in the Global North] have less weight nowadays.’
The focus of development aid tends to move in cycles, suggests Gulrajani. ‘The 1960s saw this great economic lift-off, with a lot of construction,’ she says. ‘In the 1970s, the emphasis shifted to poverty alleviation. Politics does now seem aligned to put large infrastructure back at the centre of discussions. The issue is less whether infrastructure receives development aid and more about the motivation behind that decision.’
Climate finance can also support themes that traditional aid has funded, such as major infrastructure projects. Yet hydropower dams – a favourite of many governments and international donors – can come with secondary effects, Popkins warns. ‘It’s often women who can lose out,’ she says. ‘Will the funding for a dam help the woman who grew crops at the bottom of where the dam now is? How will it make sure her life is not decimated?’
When aid comes in the form of infrastructure, it tends to be issued in the form of structured loans. As Taylor drily notes: ‘Development aid has always been portrayed as generosity – largess from rich nations – but there was never a free lunch.’ The donor country tends to want its money back, with interest. Historically, many countries have found themselves spending more on servicing debts to the World Bank, the IMF and other bodies than they were spending on health and education.
In 2005, Gordon Brown persuaded the G7 to wipe off US$55 billion of debt to 18 of the world’s poorest countries. The issue hasn’t gone away. A University of Oxford study published in 2014 argued that large-scale hydroelectric projects are almost always damaging to developing economies, saddling them with debt while offering scant benefit for the populations they displace. A notorious example is the Gibe III dam in Ethiopia, which has been especially contentious since work began in 2006. The African Development Bank, the World Bank and the European Investment Bank all declined to finance the project directly. In the end, the Ethiopian government stumped up the cash with the help of a US$470 million Chinese loan.
Finding an equilibrium between aid funding of infrastructure and public health can be tricky. More authoritarian regimes tend to favour high-profile projects such as dams, bridges or roads, which Taylor suggests means that aid-giving nations may be more inclined to support projects in more democratic countries.
Green is also concerned about authoritarianism, describing populism as ‘antithetical’ to the UN Sustainable Development Goals. Seeking positives, however, he points out that, despite the emergence of strong-arm leaders in Brazil, the Philippines and elsewhere, aid budgets in the Global North have generally held up.
Overseas development aid
The UK government last year broke its election manifesto pledge and reduced its annual aid budget from 0.7 per cent of gross national income, to 0.5 per cent, a cut of up to £5bn. The cut will be reviewed in 2024. The government said the pandemic had inflicted ‘immense’ damage on the economy and cutting aid spending to 0.5 per cent would help restore public finances.
The bulk of UK aid in 2020 – more than 55 per cent – was spent in Africa and used for bilateral aid. Just under 39 per cent was spent on bilateral aid for Asia. In 2019, the biggest recipients of UK aid were Pakistan (£305m), Ethiopia (£300m) and Afghanistan (£292m).
‘Britain is increasingly saying aid has to promote British interests, rather than supporting poverty reduction,’ says Duncan Green, senior strategic adviser at Oxfam. ‘I’m wary that this will have a damaging effect.’ Immediate impacts included a disproportionate impact on small projects, where experienced specialists lost their jobs and schemes jolted to a halt. The World Health Organization’s Global Polio Eradication Initiative lost nearly all its UK funding, with aid shrinking from £110m in 2019 to £5m in 2021. UNAIDS says it lost 80 per cent of its funding from the UK while Médecins Sans Frontières said cuts affected key programmes and were imposed with immediate effect, with no opportunity to mitigate the impact.
The decision may come back to bite the UK, warns Peter Taylor from the University of Sussex. ‘In the UK, trade and security are very high on the agenda,’ he says. ‘If you have a view that a more secure world is one where prosperity can flourish, then that is what you try to implement. But the risk is that this can break trust that has taken years to build up.’
Nevertheless, Taylor says, the picture might change. ‘It’s possible other countries have front-loaded their aid budgets. Every country is going to be short of money because of Covid-19 and time will tell if other nations cut back at a time when the UK is in a position to reverse its cuts.’
ALTRUISM AND REALISM
One of the most significant developments of recent years has been the emergence of philanthropic aid donors. The Bill and Melinda Gates Foundation has been around since 1994 and was preceded a decade earlier by the Open Society Foundation, established by the business magnate George Soros. More recently, new players on the philanthropy stage are emerging. Amazon’s Jeff Bezos may be putting his spare change into space exploration, but his ex-wife, MacKenzie Scott, is using her substantial divorce settlement and stake in Amazon (the latter put at around US$62.2 billion) to distribute her philanthropy to several hundred organisations.
Other billionaires, such as Warren Buffet, perhaps concluding the world doesn’t need another billionaire with their own foundation, have given their money to the Gates Foundation. Meanwhile, Facebook’s Mark Zuckerberg has established his own giving arm, known as CZI.
By and large, the verdict on philanthropists who invest for the longer term is positive. ‘They bring a business approach, of how you get results in the real world, and that’s enormously important,’ says Taylor. ‘The clout the Gates Foundation has brought to malaria and polio is enormous. That kind of approach is extremely targeted. At Microsoft, Gates had a vision and threw everything at it to beat the opposition. If you target that approach to altruistic goals such as clean water and sanitation, it’s incredibly influential.’
‘The Gates Foundation is fascinating,’ adds Green. ‘Private foundations don’t face the same constraints – they can take more risks. By using the evidence-based approach of business they get results.’
However, not every aid donor is altruistic and for some time, NGOs and democratic countries have looked on as China increasingly funds development projects in Africa, Asia and Latin America, often tied to major infrastructure schemes. China formally adopted its Belt and Road Initiative in 2017 under its Party Constitution as part of a resolution to achieve ‘shared growth through discussion and collaboration’, but its record of providing development aid goes back much further. In 1973, China dedicated two per cent of its GNP to overseas aid projects, with 30 African countries listed as recipients. Yet critics point to how many of its latter-day projects are supported by loans rather than grants. A 2018 Centre for Global Development report identified eight countries, including Sri Lanka and Pakistan, where Chinese aid had the potential for debt-sustainability problems. The report cautioned that ‘the primary concern is that an US$8 trillion initiative will leave countries with debt “overhangs” that will impede sound public investment and economic growth and… that debt problems will create an unfavourable degree of dependency on China as a creditor.’
As well as apparently digging up the mineral-rich soil of many nations and shipping it back home, China is investing in building projects in Asia, Africa and South and Central America that are paid for by recipient nations in the form of long-term loans. The driver of China’s development largesse is its seemingly infinite domestic demand for minerals and other resources. ‘Their main goal is to secure those in the long term,’ says Taylor. ‘They have a clear vision of what they need over the coming decades.’
Yet is China being hard-nosed or is it simply less hypocritical than the Global North? Certainly, the country comes with less historical baggage. It comes to the table without the shadow of colonialism, meaning that it brings a matter-of-fact approach to negotiations. ‘They can point the finger at the West,’ says Taylor. ‘They emphasise a policy of non-interference, saying, “This is what we need; we’ll do our stuff for mutual benefit, just don’t get in the way. Where we can work together, we will.”’
Green is impatient with a narrative that China’s aid has more sinister overtones than that of aid from Western nations. ‘I’ve been struck by the gulf between what international donors say about China and what you hear on the ground, where things tend to be much more positive,’ he says. ‘China gives recipients options. It doesn’t have a colonial discourse, which says, “We are here to fix this or that.”’ However, he does express concern about labour rights, which can reflect standards both in China and the recipient nation, and about knowledge transfer. ‘You do see the Chinese manager telling his African staff what to do,’ he says.
China could still come unstuck. Taylor muses that the country may, in the long term, encounter the same repayment problems as the Global North, which led to the G7 writing off debts. ‘You wonder whether all those African governments that take up debts with China will honour those down the line. China may have to be open-minded about what happens in the future,’ he says. ‘But it may also be that it has so many investments that there will be enough returns for this not to matter.’
THE FUTURE OF AID
Looking to the future, it seems likely that aid dynamics will shift further, as a result of both climate change and the Covid-19 pandemic. ‘There’s a realisation that we’re all in it together,’ says Taylor. ‘Inequalities of health, education and wealth happen in the UK and North America as well as in Asia and Africa. They’re universal. The time’s passing where wealthy nations could sit back and say, “Look where we’ve got to, here’s some extra cash’’.’
Those two great issues, climate change and Covid-19, have forced Popkins to reassess her outlook. ‘I was optimistic [about the long-term impacts aid could make] until the pandemic came along,’ she says. ‘We are now seeing specific trends, such as increasing authoritarianism and challenges to global co-operation.’ Yet she’s still hopeful that the issue of poverty will slowly be chipped away. Referring to the old adage that ‘the poor will always be with us’, she counters: ‘That may be true, but the resilience of civil society will always be there, too, as will the youth, the next generation.’
For her part, the ODI’s Gulrajani believes that current bumps in the road are likely to be smoothed over. ‘We are seeing a realignment of power in the world,’ she says. ‘The next five to ten years will see geopolitical tensions, but beyond that, we may arrive at a recognition that nation states are no longer divided into the rich world and ex-colonies. I’m optimistic that, ultimately, aid will become obsolete. We’ll be talking less about North– South giving and more about how we are collectively united by globally existential challenges.’
India's hostility to external charities
India has long prided itself on its independence when it comes to dealing with humanitarian crises and, more recently, it has asserted its confidence in administering long-term development gains without external donations or, as the government sees it, outside interference.
At the start of this year, India blocked up to 6,000 NGOs and charities working in the country from accepting overseas funding; 179 civil society organisations had their licences revoked. Other impositions include a spending limit of 20 per cent on administrative costs, such as staff and offices, and a ban on non-profit organisations transferring money to other groups.
Charities affected by the ruling include Oxfam, which has worked in India for 70 years, the Missionaries of Charity, founded by Mother Theresa, and Amnesty International, which had its bank account frozen. Oxfam said that its work in India would be ‘severely affected’ after it lost its licence to receive funds from abroad. Amnesty accused the government of a ‘witch hunt’. ActionAid says it’s essential to move funds between the many smaller partners with which larger NGOs work.
The Indian government has progressively imposed regulations and restrictions on charities since Prime Minister Narendra Modi came to power in 2014. The government says that it’s merely requiring charities to adhere to high standards of financial probity and working to improve accountability and transparency in the use of foreign funding.